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date: 14 December 2019

Abstract and Keywords

This article reports estimates of consumption and income poverty in the U.S. from 1960 to 2009. It argues that consumption-based poverty is a better measure of well-being because of the ability of consumption to capture flows from the ownership of durable goods, the insurance value of government programs, access to credit, and the accumulation of assets. It describes how consumption poverty is measured, and highlights the important role of the inflation index, which is used to update poverty thresholds. If official poverty thresholds are adjusted for the biases in the consumer price index (CPI), then income poverty is lower than that reported in the official statistics. Who is determined to be poor and what the poverty rate is can differ across poverty measures. In the 2000s, consumption and income poverty moved in different directions. Consumption poverty fell while income poverty using a corrected CPI rose. The article concludes with suggestions for future research and for working around some technical limitations associated with a consumption-based measure of poverty.

Keywords: income, poverty measures, consumption, inflation, consumer price index, well-being

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